Business distress levels at near record lows – R3

LEVELS of business growth in the West Midlands remain at record highs and business distress near record lows, according to new data.

R3’s Business Distress Index tracks the number of local businesses that are experiencing decreased profits, sales volumes, or market share, regularly using their maximum overdraft or making redundancies.  

It also surveys whether businesses are investing in new equipment or experiencing increased profits, sales volumes, market share and business growth.

The Index highlights that almost three-quarters (70%) of businesses in the region are now showing none of the key signs of business distress, which is 18 points higher than the same period two years ago.  Similarly, over two-thirds of respondents (69%) are currently reporting at least one key sign of business growth, a 15 point rise from June 2012.

However, the latest statistics also show that signs of growth and distress are still uneven around the country.  While 30% of businesses in the Midlands say they are experiencing at least one sign of distress, this figure rises to 34% in the South and 43% in the North.

R3 Midlands chairman Richard Philpott, a partner at KPMG in the region, said: “While Westminster needs to be aware of the growing disparity between the North and the South, the R3 Business Distress Index continues to highlight some very positive results.

“It’s encouraging that business growth isn’t yet showing signs of decelerating and the pace of the recovery is being kept up.

“A word of warning, though, businesses need to be on the lookout for any signs that they’re over-stretching themselves. Sales, profits and business expansion may be rising, but if a business runs before it can walk then problems can emerge.”